Thursday, November 29, 2007

Plugging a mate's band - but hey, I'll be there myself. ;) Still, scary memories of Thursday night drinking. Last time I did that seriously, it was the week before Summer Solstice. A British friend had some of his friends over for the celebrations. One of them had apparently just had a streak of very good luck with his business, and appeased the gods by going to the ATM, punching a random button and insisting that he would spend all the money the machine gave him on vodka & Red Bull for everyone that night. Silly limey got 5000 EEK (£200 and change). After a long pub crawl involving Kissing Students, Rasputin (which refused to serve us any food except gherkins, so we just had more vodka), the Atlantis nightclub ("...but you don't understand - men like cheap sluts!" - a fine justification to present to one's girlfriend) and invariably Zavood, I got home around 4am, woke up at 8 and made a brave attempt to walk to work. I made it as far as the petrol station next to my house, where I proceeded to imbibe a large quantity of Nestea green tea and wait for a cab. Normally I take pride in being able to maintain some level of functionality with a hangover, but this was too much for me. I crashed onto the couch in the office and slept until 3pm. I respectfully posit to you, sir, that it was not the drinking that did me in, but the lack of a full night's rest.

Mind you, the last Helena Nova gig in Tartu started with half a liter of vodka's worth of Screwdrivers and ended in Krooks. But that wasn't a Thursday.

Tuesday, November 27, 2007

Oh all right then. I really didn't want to talk about the devaluation scare, because it's just too mind-bogglingly stupid, a cringe-inducing example of lemming behavioral patterns. But if you insist...

Here's what happened:

Back in early November, someone at an Estonian Russophone messageboard posted a game scenario where the Estonian government announced a snap devaluation of the kroon, and asked the regulars to suggest their actions.

Because the disclaimer was in fine print, some people didn't notice it, and thought it was an actual information leak. So they started converting their assets to Euro and calling all their friends to warn them. This apparently caused a wave of vague rumors: nobody knew where they were coming from, but everybody was talking about an imminent devaluation, and people were scared.

A few days ago, the original messageboard post got picked up by someone from the Night Watch, who posted it on their website. This sparked a mass panic among the Russian population: if Night Watch says it, it must be true. The information spread so pervasively that even those who didn't care about Night Watch were convinced by all their friends. Since the text said that the devaluation would happen on Monday morning, Sunday saw a run on currency exchange companies: people were buying up Euros, Swedish kronor, British pounds, even gold (but curiously, not dollars). Tallinn's big independent currency exchange company, Tavid, actually ran out of foreign cash.

This run was almost entirely confined to the Russophone population. The Estonians had gotten wind of the original rumors, but never panicked. They had good reason not to: devaluation of the Estonian kroon is extremely unlikely, for multiple very good reasons.

First of all, the law. The kroon is pegged to the Euro by legislation; removing the peg would require a new bill, and a bill can only be passed if it has gone through no less than two readings in parliament, with no less than two weeks between them. The Bank of Estonia can only vary the peg rate by 3% (0.47 EEK). In theory it is possible for the BoE board to hold a continuous series of sessions through the night, adjusting the rate by 3% every time, but I will dare you to find a politician who could pull that off and not get lynched by an angry mob the next morning. Otherwise, a devaluation with forewarning is entirely pointless. The idea of devaluation is to remove excess wealth from the economy, wealth which defeats motivation to try harder. If everyone just converts their savings to Euros and back again, you've lost a lot of voter confidence with no benefit at all. Say what you will about the Estonian government, but they know a bit about economy theory.

Second, the kroon is secure. Estonia operates on a currency board system, whereby the BoE only issues kroons in return for foreign currency. Every kroon in circulation is backed by a dollar, Euro, pound, yen or dinar sitting somewhere deep in the vaults under Estonia Puiestee. While the total worth of these reserves does naturally vary, overall the BoE is capable of redeeming all the money out there at the peg rate. The sort of concentrated market effort that would drive the value of the kroon down enough that the BoE reserves would be depleted is not possible due to the rules of international banking. So the kroon isn't going to crash on its own; it can only be devalued by the government.

Third, there is simply no reason to do it. The kroon has been in far worse trouble than today. It wasn't devalued then (when it was still pegged to the Deutschmark) and it won't be devalued now. There is simply nobody who would benefit from it. The banks need their Euro-denominated mortgages paid back, and don't want the general population to suddenly lose a big chunk of its purchasing power. The businesses don't want it, because the devaluation only benefits industrial exports, which are a minor factor in the Estonian economy. Estonia's main economic force is its skilled labour, and that has shown willingness to go abroad in search of higher pay. To retain their workforce, the employers would have to recalculate salaries in Euros, which they can do with relative ease because they sell their products for Euros anyway. So devaluation is pointless.

But why did the currency run happen, then? The scare is rooted in the general sense of pessimism that has arisen in the wake of the economic slowdown. We seem to be heading for the soft landing rather than the hard crash, but people have come to expect wild growth and are discouraged when they don't find it. Accession to the Eurozone was our next grand project, after EU and NATO membership, and now that looks unlikely for at least a decade. Consciously or subconsciously, people want their government to jumpstart the economy, initiate another period of massive growth. Without a deep understanding of economic processes, based simply on hearsay and Delfi editorials, they expect that the government would do something like this - trade off a momentary lapse against future growth. And besides, who in Estonia has savings anyway?

The reason that the scare was prevalent among the Russophones is that - and I know I'll be called all sorts of bad things again for this - the majority of them are working-class immigrants without the education or the curiosity to try and figure out what is happening, exactly. Their pervasive distrust of the government, a reflex applied through surviving the Perestroika, coupled with a nagging suspicion that Andrus Ansip personally hates each and every one of them, makes them susceptible to such rumours.

People are mostly lemmings. There isn't much we can do about that. In this case nobody got hurt very much, although people will indeed lose money on the exchange rate. Far from being critical, the situation is simply embarassing.

Wednesday, November 21, 2007

Our neighbours aside, the thing that is supposed to kill Estonia is an economic implosion. Ostensibly fueled by cheap lending from the Scandinavian-owned banks, it has resulted in very high inflation and a very high current-account deficit. The harbinger of doom, they say, is the crash of the real estate market.

Now, certainly things are not as rosy as they've been in the past. But is the sky really falling?

Inflation is the first boogeyman. A year ago we were desperately trying to stuff it that last bit under 3%, so we could join the Euro. Now it's around 8%, year-on-year. Horrible, isn't it? The EEK is losing value fast!

Except it's not, because it's pegged to the Euro. All sorts of analysts have been calling on the Bank of Estonia to float the currency, but they don't seem about to do it. Pegging to the Euro makes sense because most of the Estonian economy is tied into the Eurozone. People pay their mortgages in Euros, and they get paid by companies that sell their wares for Euros. So as long as the kroon stays pegged, and stays freely exchangeable, it's losing value at the same rate as the Euro - which isn't much at all. You can go to Paris today and buy as much stuff with the same amount of kroons as you could a year ago.

What's happening isn't that the currency is losing value, but that the cost of living is going up. Prices in Estonia are going up; in fact they're inching ever closer to the Central European ones. But the economy is growing much faster than the Eurozone's - and despite a noticeable slowdown, it's still growing faster than inflation! So we are still getting more wealthy, just at a slower rate than before. As long as this keeps up, it's not an economic crisis - it's just part of the process of catching up to the European living standard. Oh, did you think you'd end up getting European salaries without European prices? Silly rabbit.

The current account deficit is a nebulous economic term: to put it very simply, it's the difference between the worth of stuff that Estonians own abroad, and the worth of stuff that foreigners own in Estonia. So we owe them more than they owe us, which is why we have the deficit.

The problem with this number is that people tend to assume it means something different; they think it's the amount of money we owe to somebody. Which is not the case. The current account deficit is the result of the specifics of the Estonian economy, which has been successful by attracting lots of foreign investment. Our favourable tax code has resulted in lots of companies using local labour to produce goods or services, but not actually selling anything here. So the Estonian subsidiary, a locally registered company, sells its product to the mother company for exactly enough to cover costs - wages of the employees, office rent, equipment purchase, etc. This makes sense because the company has no profit left over at the end of the year - everything is being reinvested. So the company doesn't pay any tax on that profit. (The government gets income tax from the individual employees' salaries.)

But the subsidiary still has revenue, and capital assets, and those do keep growing. So the foreign company's worth of stuff they own in Estonia goes up. And the current account deficit increases. Mind you, there's still money coming into the pockets of both Estonian employees and the Estonian government. But because this money is on the books as cost, it doesn't get included in the current account calculations.

Now, the current account deficit is still a bad thing for the economy, because we'd rather own stuff than be salaried employees. There are a few big movers in the right direction, like Tallink, an Estonian company which is now the biggest ferry operator on the Baltic. But a current account deficit is by no means a sign of imminent economic crash. In fact, it means that our economy is secured by the stability of established European markets. Which is nice.

The third, final and most overhyped issue is the real estate crash. The banks have been giving out lots of loans in Euros, with low interest. People have been taking advantage of that to buy lots of apartments. Because the number of people with the money to buy a home is growing, and the supply of apartments is limited, their prices skyrocketed. Because old Soviet apartment blocks are rather unpleasant, people were willing to pay more for new apartments. Because the market prices for apartments were insanely above the costs, lots of companies scampered to start developing residential properties.

This cycle continued for a while, until the end of 2006 or so, and then it hit a wall. Prices got too high, the inflation rose, the economy started to slow down, people started losing faith. The first victims were the speculators, who were trying to buy up properties still in development and sell them for a profit when they were completed. Because the bank loan rules are fairly strict, they had to turn their money around quickly. When the demand dried up, they had to get out of their investments quick. But this had a relatively minor effect on the market. There weren't very many of these guys, and what they were doing was kind of assholey, so fuck 'em.

The market ground to a halt. The number of sales fell dramatically. Prices also fell, but curiously, not all that much. There are people like this guy, and Postimees staff writers, who keep bringing up massive discounts in apartment prices as proof of a meltdown in progress. But the important thing that a lot of folks don't notice is that all these grand discounts come not from owners - but from developers.

There's an important difference. An owner of an apartment is getting back the money he paid for the apartment when he got it. With any new building, the sell price is going to be only slightly higher than the price the owner paid for it. A wave of massive discounts on the secondary real estate market would mean that people are actually losing money. But interestingly enough, this is not happening.

The 200 million kroons of total discount on apartments that this dude talks about is money that never existed. Nobody ever paid those 200 million kroons and then couldn't get them back. All of that money is developers' discounts; profits that they hoped to get by putting new properties on the market for improbably high prices at the peak of the boom, when they actually had some chance in hell of getting that sort of money. Now the peak has passed, the market is not willing to pay improbably high prices, and they're having to lower them. But - they're not lowering them past the level of cost. With the exception of tiny, one-shot development ventures that ran out of cheap loans before they could finish their properties (probably due to the lack of construction labour - all the workers went abroad for better pay), everyone is still getting a profit. Just not as much of one as they'd hoped.

One point that has been brought up is the number of evictions. Year-on-year, it has increased tenfold. What the sensationalist articles are slow to point out is that the absolute numbers are still very low. And we don't know how many of those evictions were speculators, who only lost tiny down payments. There were some very dodgy deals available at the height of the lending spree, but most people who buy apartments to keep, have to adhere to the mortgage rules: down payments of 10-15% or more, and the monthly payment cannot exceed 30-40% of the household net income (and that percentage includes all repayments, including car loans and credit card debt). And you have to be able to afford the mortgage when you buy the apartment; any raise or additional income you get afterwards eases the pressure.

Even for the poor buggers who bought at the peak of the price rally, there are some good news. Most mortgages in Estonia are issued in Euros at EURIBOR + the bank's margin, and the margin is usually pretty low (less than 1%). EURIBOR has now stopped growing, and might even fall - the European Central Bank has to do this to keep the world financial markets running. And as long as the economy growth stays even a little ahead of inflation, salaries in absolute EEK numbers continue to grow, and the EEK stays pegged to the Euro, the effective repayment level will only shrink. Because everyone here will be getting more kroons, but while they won't be able to buy that much more milk with them, they will be able to buy more Euros.

To conclude: yes, the Estonian economy has problems. But they're not unsolvable, and they're not grave. So could the journalists and the lemmings please stop being apocalyptic about it?

Tuesday, November 20, 2007

A letter to the managing director of a Siberian coal mining company, from the local office of United Russia. It reads:

I consider your refusal to provide financial assistance to the regional branch of the United Russia party for the campaign of the upcoming parliamentary elections as a refusal of support for President Putin and his formative course.

I consider it my duty to notify the Presidential Administration and the Governor of Kemerovo oblast about this.

Thursday, November 15, 2007

For all my European posturing (for I am neither convincingly Estonian, convincingly Russian, nor convincingly Jewish) - there is that part of me, the part established in the first seven years of my life in the Evil Empire's Switzerland and the confusing, irrational mess of a society it turned into in the early 90s, that will remain Soviet. Hell, I even got to wear a school uniform for a few months in 1st grade!

And the reason I'm saying it is, I've been eating mandarins. English-speakers will know them as tangerines, but for the purpose of this discussion, they're mandarins. And I've been thinking that the Soviet legacy will finally die with the last person on Earth who subconsciously, inevitably equates the taste of mandarins with New Year's Eve.

It's an aspect of the economy of the Soviet Union: citrus, like most other fruits you couldn't grow locally on your allotment, was a rarity. Oranges were even more rare than mandarins, because there were more places in the SU where mandarins could be grown industrially. You couldn't go to a shop at any time of the year and buy some citrus. Such things were sold only occasionally, in batches.

People could get rarities through their jobs, though. The big corporations tried to instill loyalty in their workers by sending out raiding parties, scouring the warehouses and various shady connections for deliciousness. On major holidays, you would get a package from work, with things for your kids.*

And mandarins were one of those things: you'd get them in the packages, and you'd get them in the shops, just before New Year - the technically secular form of the pagan Winter Solstice and imperialist Christmas. Something exotic, and very un-wintery, to put on the celebratory table. Then you'd sit there, watch the Blue Flame show on TV (baby blue was the predominant color of Soviet New Year, for some reason) and wait for the coming of the Näärivana (or Father Frost, if you'd like) - a theatrical school student hired by the trade union that your parents belonged to.** You had to recite a poem for him before he'd give you your present.

The scarcity of the Soviet time, the deficit - which I never really felt in its worst form, because in the late 80s Estonia was a much better place to be than the rest of the Soviet Union - served to curb the consumeristic impulses, to an extent. Western tradition of Christmas involves a pile of stuff under the tree, lots and lots of presents. But for me, it's always been one gift; that one thing, which was usually not so much expensive as unattainable, that I could wait for and finally get, just past midnight. Then I'd go out with my father, and we'd set off the fireworks; actually fireworks are a much later thing, in the Soviet days it was bangers - cardboard tubes with a rope that you'd pull, and it would set off a small powder charge inside, spraying confetti all over, and maybe even a little present that you'd have to search for in the snow.

That said, at least there were a lot of holidays to get one present for. New Year's was the main one, but there were also two Christmases. The Catholic Christmas (as it was always referred to in Russian, despite Estonia being a Lutheran country - for what it's worth) was celebrated along with the rest of the country. This was the true pagan holiday, the Winter Solstice, a time of quiet joy with the family, irrespective of your religious affiliation. Then there was the Russian Christmas; the Orthodox church still used the Julian calendar, where everything was offset by two weeks compared to the official Gregorian one, so Christmas fell on January 7th. And then there was the final triumph of holiday spirit over reason and logic: Old New Year, celebrated on January 14th. All these were worth a present, though not all of the presents were equal. But it's the very fact of a present that counts.

All these holidays were so draining on the population, that they were referred to as simply "the New Year holidays". It was common knowledge that any business transactions, any negotiations or requests, had to be delayed until the end of January. During the New Year holidays, the Soviet Union just stopped.

--------*This is one of those improbably strong Soviet traditions that is still going on, in Nordic, Western Estonia after nearly two decades. My employer - big enough to actually be a faceless corporation - still distributes gift bags of Kalev candy to employees' children at Christmas time. Along with the informal celebration of March 8th as International Women's Day, and the fact that the Latvian border guards in Valga will still address you in Russian and not English, it's proof positive that the regular people are deep down both willing and able to let go of the insults and injuries of the past, and keep the positive bits.

**It was a lucrative, sought-after job. My former boss told me about his exploits as a Jõuluvana, doing some door-to-door promotions, long after the SU had burned in flames. It was the duty of nearly every head of family to offer him a shot of vodka, and he had no moral right to refuse.

Monday, November 12, 2007

I sincerely hope there's nobody anal enough to count them, because Blogger's dashboard might actually also count the ones that are still in draft stage, in which case this is not the 300th post published on AnTyx. But let's just pretend it is, anyway.

Days like today is why I own a car in Tartu. I live alone, and I'm within half an hour's walking distance of my downtown office, which is doable even in the freezing winter months. I'm now much more conveniently serviced by public transport than at my previous rental apartment. It would definitely be cheaper to take the bus than drive around, usually alone, in my relatively enormous '93 Mazda 626 liftback, which consumes about 15l/100km in Tartu urban driving, because I only do about 70km on my tiny commute, in traffic, and it always runs cold. I now need to buy winter tires for it, then find out what I need to fix up for the MoT coming in December, and insurance runs out in early January (when I'll have owned the same car for a full year - OMG!). It's a really expensive proposition.

But on days like today, when it's snowing with a cold wind, and it's dark, and slippery, and generally unpleasant - it is an indescribable pleasure to scrape the ice off your windshield (takes longer than the actual drive home), get inside, put the heater on full, turn on the stereo, and carefully inch along the treacherous streets to the wail of the over-revving engine and the cricket staccato of the ABS brakes, driving past the poor, miserable bastards waiting for the bus.

South Estonia, especially Võru county, is a place hiding many interesting things - and many interesting people. There is a Barclay Hotel in Tartu, named after Barclay de Tolli, the Russian army general from the Napoleon wars. It is located in the building which, in the Soviet days, used to house the headquarters of the South Estonian Military District. The presidential suite of the hotel used to be the office of the district commander - one Djohar Dudaev, later on the first president of rebellious Chechnya.

There's also an urban legend about nukes in Võru. I thought it was improbable, myself - strategic munitions so close to the Western border - even though the Raadi airfield near Tartu was designated as an emergency strip for Soviet nuclear bombers. But stranger things have happened. Below is an account by a friend who grew up in Võru county.

There were as many as eight Soviet military objects in Võru county: a surveillance station in Meremäe, a communications unit in Mõniste, missile bases in Sänna and Nursi, firing ranges in Nursi and Kubija, an airport in Ridali and another missile base in Palometsa.

Nursi and Sänna were the nuclear missile sites. In Sänna, at least one of the cupolas of the underground launching silos should still be there, although access to the base is restricted now. Both bases stored intermediate-range ballistic missiles - R-12/SS-4 - targeted to cities in Belgium, Germany, Denmark and Norway. The R-12 Dvina missiles were exactly like the ones deployed to Cuba in 1962.

A missile was actually fired to Novaya Zemlya once from the Sänna base, without the nuclear warhead, supposedly, but this fact has nevertheless a highly gasp-inducing factor.

The missiles were removed from Sänna and Nursi around 1988-89, although yeah, there are all sorts of stories about how some of them were left behind, hidden away with other weaponry. Around 1999 people became sort of paranoid about some supposed secret storage facilities...

When the missiles were gone, most of the Russians living at the bases quietly left as well, and local farmers couldn't have been happier. They explored the sites and brought all kinds of stuff home with them and used it in their households. Some barracks were never restored either, and roughly about 6-7 years ago, some local schoolboys went to Nursipalu and brought with them a huge glass jar filled with mercury, which was stored under a layer of petroleum. The word is that those glass jars were in abundance there. I wonder what these were used for.

Another interesting fact is that although the nuclear parts of the warheads were removed a long time ago (some warheads still remained, but without the radioactive stuff - some local farmers have made use of these as bee-hives, actually), they are still conducting radioactivity surveys regularly, the last one was apparently in 2001-2002.

As far as the urban legends go, people do talk about the high incidence of leukemia in Nursi.

Friday, November 09, 2007

The pictures of riots in Georgia, being supressed by the police, cannot help but bring up comparisons with the Bronze Night in Tallinn. While our own April riots had a sequence of events building up to them, events that most TV viewers were not aware of, there was at least one cause that the anchors could mention: the unrest followed the relocation of a Soviet-era war memorial.

The Tbilisi riots are far more enigmatic. The official news sources could not quote anything except the opposition's general dissatisfaction with president Saakashvili and his political party. While my esteemed colleague has forfeited attempts to figure out what the hell is going on there, I have the advantage of speaking Russian. As usual with such things, LiveJournal is a good source of perspectives and links to relevant articles. Here's what I've got so far.

Mikhail Saakashvili was elected as president in January of 2004, following the Rose Revolution. Following a long reign of ex-Soviet bigwig Eduard Shevarnadze, he was a welcome Western-minded alternative. He had the support of the people, and some very important allies - the US took a particular interest in Georgia, since its location makes it a useful platform to project power into the Middle East and Central Asia.

The presidential elections were followed by parliamentary elections, which Saakashvili's coalition promptly won. Georgian law states that the President is elected for five years, and the Parliament for four. So Saakashvili's first term would've run out in the winter of 2009, and the cabinet's in the spring of 2008, in other words Any Day Now.

At the end of last year, the parliament passed a constitutional amendment rescheduling the elections. The government was reluctant to hold a campaign at the same time as Russia, which is having an election season extending into next spring as well. It was thought - not unreasonably - that Georgia would be used as a propaganda cause, and it would be a great temptation for the Kremlin to try and destabilize the small country, like it's done before by supporting the separatists in the provinces of South Ossetia and Abkhazia, which are still under the control of Russian peacekeepers. So the amendments, which were found to be legitimate, but iffy by the Council of Europe's constitutional monitoring authority, extended the term of the Parliament by six months. This would allow the elections to be held long after Russia had made its decisions, for better or for worse. Saakashvili bought this extra time by voluntarily giving up three months of his own term, thus having the Georgian parliamentary and presidential elections at the same time.

This is what pissed off the opposition. As it stands, Georgia's political system is fairly heavily tilted in favour of the President, and the rescheduling is also an obvious attempt to use Saakashvili's personal popularity to strengthen the position of his supporting coalition*. With a popular incumbent president currently supported by a loyal parliamentary majority, the opposition is completely out of the loop. It doesn't help that the opposition leaders appear to include the sons of Georgia's first democratically elected president, Zviad Gamsakhurdia*.

But the opposition alone couldn't make the riots happen. Why are the common people on the streets? Different sources put the number of protesters as high as 150,000 people, and in a country about twice the size of Estonia with almost three times the population, that's still a huge number. (To compare: the marauding crowds in Tallinn on the Bronze Night are estimated at being up to 3,000 strong, by the wildest counts.) What's got them all so riled up?

Georgia was one of the first Soviet republics to make a serious attempt at independence, and the only one except for the Baltics that is not a member of the Commonwealth of Independent States (a mostly pointless virtual union established after the fall of the USSR to alleviate exposure shock in countries with little experience in self-rule). At the same time, its history has been infinitely more tragic. The early 90s were marred by extensive Balkans-style bloodshed in South Ossetia and Abkhazia, and the corrupt government of Shevarnadze impeded the country's economic growth. Saakashvili was supposed to change all that. But Georgians are, for most intents and purposes, Mediterraneans. The country has a long history stretching back to the pre-Roman times - it's known to have been a trading partner of Ancient Greece, and it can be argued that it is part of the same civilization. As Mediterraneans often are, the Georgians are impulsive and impatient. In two and a half years of effective rule, Saakashvili has failed to produce an improvement in living standards as drastic as was expected of him. For all its new foreign markets - you can now buy genuine Georgian wines in Tartu, and they're quite good - the country remains relatively poor. When the people are disgruntled, they blame the leader.

So, this week the protesters took to the streets, and the situation rapidly dissolved into a riot. Police used water cannons and tear gas; in an unfortunate coincidence, the worst of the clashes took place in the same boulevard where the Soviet authorities once harshly suppressed a demonstration of Georgian independence activists, and people can't help but make the painful connection. The president declared a state of emergency, which included an information blockade: foreign TV channels were shut off, the local press was confined to quarters. That is finished now, and it seems that it might have had a point: given a bit of time to catch their breath without having to worry about the media, the government and opposition leaders were able to meet and agree on terms.

Stunned by the riots, Saakashvili has gathered up his bravery and gone all-in. He has proposed a shotgun election in January of 2008, less than two months away. Ideologically, the opposition has lost its footing: they cannot accuse Saakashvili of being a corrupt, power-hungry politician if he is volunteering to cut his own term by a full year to give the people a chance to express their distrust of their leader. At the same time, the president is effectively counteracting claims that the police suppression of the riots signalled an end of democracy in Georgia - in the wake of the crisis, he's doing the most democratic, absolutely textbook thing possible, by effectively resigning. Such a short campaign also leaves the Kremlin with precious little time to influence the elections, especially as the opposition has definitively proven its incompetence by failing to turn a 150,000-strong crowd into any sort of real political advantage.

At the end of the day, despite the sheer amount of balls it took Saakashvili to call an early election, it seems to be a safe move: for all the popular disillusionment with the supposed wonder boy, there does not seem to be any other Georgian politician with a viable chance to get the popular vote. Saakashvili will most likely be re-elected, in a free and democratic poll monitored by European observers and the US advisors already in the country, and the opposition will be silenced.

Most of this analysis is based on the conversations in Georgians' LiveJournals, as well as Russian news sources, including anti-Kremlin ones. I've tried to arrange the information and pick out the scenarios that seemed most plausible to me. We'll see what happens.

Now for the Western perspective. The US seems very interested in having Georgia as a satellite nation; it is at once fervently anti-Islam, having a very strong Orthodox tradition (in fact along with Armenia it is one of the oldest consistently Christian countries in existence), but it is also fervently anti-Russia. For the US's interests in the region, Georgia shows a potential of loyalty second only to Israel. America might be a bit busy with other things in the Middle East/Central Asia region right now, but Georgia would definitely be a very good ally to have. Which is why the Georgian army is re-tooling with US equipment and training with US military instructors, and the government lends an ear to US advisors. There is even persistent talk of Georgia getting NATO membership. If Estonia could join NATO without a border treaty with Russia, Georgia can join NATO without resolving the issue of its breakaway provinces - as long as the US wants it bad enough.

For the EU, Georgia is a sweet piece of property as well, and you only need to look at the map to see why. With the last round of expansion, Europe has the use of Bulgarian and Romanian ports on the western shore of the Black Sea; with Georgian ports on the eastern shore, the EU is only one short skip away from having access to the Kaspian oil reserves - completely bypassing Russia. Hell, if they can extend the pipework to Turkmenistan, it would render Nord Stream redundant!

At the same time, Georgia is a far easier mark than Turkey. The EU is more or less done in the north and its own immediate vicinity; like all the major powers today, it is most interested in Central Asia. If it has a serious interest in access to the Caspian - and it damn well has to - it will have a far easier time integrating little old Georgia, than the enormous, barely secular mess that is the former Ottoman Empire. If the Georgian people's main complaint with the Western-minded Saakashvili is that he's not making the economy grow quickly enough, well, that's easy. The EU has more than enough experience in pulling up destitute post-Soviet economies by the ears. Hell, let's not forget that Mart Laar held an official rank as Saakashvili's advisor!

Estonia could really use a new project, something to make us feel good about ourselves, make us feel relevant as a part of a single Europe, and also make us be seen as relevant, as a useful European force. For about a microsecond there, Estonia had an internal meme of becoming a world expert on Russia, the West's go-to guys on how to deal with our eastern neighbours. That didn't turn out well, but we can still become the world authority on rehabilitating downtrodden small countries, like we've done with ourselves. Estonia is in a good position for taking the lead on a project that has the attention and backing of the entire EU, proving our expertise and establishing ourselves as something more than just the homeland of Skype and cheap beer.

Georgia has a long way to go, but it's still on the right track. Let's see what happens.

--------*There's a parallel to be drawn here with Putin and United Russia, or indeed Andrus Ansip and the Reform party. The key difference in the former case is that Putin is directly leading the candidate list for UR - in fact he is the party's only name in a traditionally three-strong federal component, the three candidates that the entire enormous country gets to elect, supplementing the individual lists in each constituency. Saakashvili is not being quite as obvious about it, it's more in the style of George Bush's personal popularity in 2004 helping out the Republicans in the simultaneous Senate/Congress elections. The difference in the latter case is that Ansip is a creature of the party; for all his personal vote record, he ran in a safe constituency, and people who agree with the platform tend to just vote for the top name in the Reform party list. Ansip may have personal ambitions, but he doesn't have the credentials or charisma to drag a party into parliament in the same way that Mart Laar or Marek Strandberg can.

*The opposition leaders seem to include Tzotneh and Konstantine Gamsakhurdia, who seem to be brothers; there have been leaks of their phone conversations with Russian foreign intelligence officers. Zviad Gamsakhurdia's biographies mention that he had three sons, but I haven't found one that lists their names. Correct me if I'm wrong.

Wednesday, November 07, 2007

It's November 7th, 2007, the 90th anniversary of the communist revolution in Russia.

News of the day:

1) Russia is demanding that Latvia make Russian a state language. Anyone still admiring the Latvians' ratification of the border treaty and generally playing nice with Moscow recently? This is a particularly excellent statement to make right now, when the country's economy is suspect and the government is on unsure footing. There's definitely someone in the Kremlin looking to repeat history and arrange for Russian military assistance to help maintain the peace in an embattled Latvia (for the next however many decades).

2) Russia is unilaterally pulling out of the European common arms limitation treaty. Now, one cool trick my high school history teacher showed us was to take a look at the orders of battle before the start of WWII, and then use that data to deduce which countries were actually intending to go to war. (Hint: it wasn't France.) A particularly cute statement is the head of the Army general staff going on record saying that Moscow is worried about a build-up of arms in the Baltic states.

Given that the chance of the Baltic Batallion invading Russia is fairly negligible, I come back to my theory that the Russian authorities aren't even bothering to lie any more - you just have to listen to what they're actually saying. They're not worried that the Baltics are a threat to Russia's security, they're worried that the Baltics might have a more formidable defense than they would like.